1984 (3) TMI 16

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..... Harji Dhaliwal of Bombay, the owner, for sale in the Daily Tribune dated March 19, 1972. In November, 1972, the bargain of sale was struck between her and Shri Inderjit Singh, respondent, for a consideration of Rs. 1,00,000. The sale deed was got executed by the respondent from her on December 4, 1972. After the sale, the Competent Authority asked the Inspector of Income-tax to evaluate the property. He put its value at Rs. 1,53,800. The Competent Authority finding the assessed value 15% more than the apparent consideration, initiated proceedings against the respondent under s. 269C of the Act. Thereafter, it asked Shri R. L. Grover, Executive Engineer (Valuation), to assess the value of the property. He, on the basis of land and building .....

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..... appeal by this court. We have duly considered the argument of the learned counsel. However, we agree with the submission of Mr. Sharma. It is well settled that rental method for evaluating the properties which are on rent at the time of sale is a well-recognised method for determining the fair market price of such buildings. The method has been given recognition by the Legislature even under the W.T. Rules. According to rule 1BB of the said Rules, the valuation of the residential buildings can be determined by multiplying the net maintainable rent by 100/8. The method is also approved by judicial precedents. The Supreme Court in State of Kerala v. Hassan Koya, AIR 1968 SC 1201, observed that when the property sold is land with building, .....

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..... ty was given on lease by the respondent at the rate of Rs. 780 per mensem. The provisions of the East Punjab Urban Rent Restriction Act, had been made applicable to Chandigarh before the date of sale. While determining the annual rent, the amounts spent on repairs and paid as taxes by the owner are to be deducted from the gross annual return. Normally two months' rent is considered reasonable for the purpose of repairs. In Chandigarh, no local tax on property had been imposed then and, therefore, in the present case, no amount is to be deducted on that score. If the rent of the building at the time of sale is taken as Rs. 780 per mensem, the annual rental value comes to Rs. 7,800. Multiplying the amount by 12 will give the fair market price .....

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